Technical Analysis – 1st May 2009

Axis Bank

Symbol: AXISBANK                          Suggestion: BUY with Stop loss at Rs. 511

Figure 1: Price movement bar chart

Figure 1 displays the movement of price in the form of bar chart for Axis Bank. As can be seen from the figure, the price is currently moving in between the two trend lines, upper one being referred as resistance and lower one as support line. From the volume chart, it is also evident that the volume increases whenever price touches the support or resistance. Also, the support and resistance line has been proved so many times, therefore it is expected that the price will continue moving in this direction for some time. Point to note is that the trend lines are sloping upward, therefore pointing towards Bullish phase.

Figure 2: ADX chart

This is further evident from the ADX chart (shown in figure 2). The current value of ADX is 28.78, which means that the price is still in the trending phase. This further strengthens the importance of the trend lines (shown in figure 1).

Figure 3: MACD chart

As the price is in the trending phase, therefore the best tool to look at is MACD (figure 3). The MACD line crossed the base line EMA(9) from below on 16^th March 2009, and from that time onwards it has been continuously moving upward. This is in line with the analysis of price pattern (figure 1), and further increases the probability of a Bullish phase in the near future.

From the above analysis, it can be figured out that Bullish phase is identified in the Axis bank for a short run. Thus, my advice to the readers is to buy the stocks with a stop loss at Rs. 511.

Infosys Technologies ltd.

Symbol: INFOSYSTCH                     Suggestion: BUY

Figure 1: Price movement bar chart

Today, price broke the resistance line which it had been abiding by from last 5 trading sessions (figure 1). This movement marked the end of the channel and should not be considered a whipsaw, as the volume at the time the price moved beyond the resistance line was comparatively high (around double the value of last 5 days volume). This movement further marked the starting of a Bullish phase in prices of Infosys Technologies.

Figure 2: ADX chart

The current value of ADX is 21.4 (figure 2), which means the trending phase is on. But the manner in which the ADX graph is falling down, it seems that the trending phase will come to an end in the coming 2 sessions and thus the further movements in price will be decided by oscillators.

Figure 3: MACD chart

But as the current phase is trending, MACD has been referred (figure 3). The MACD is above the EMA(9) line, therefore confirming the Bullish phase. It can be seen that only due to today’s session the MACD has shot up well above the EMA(9) line, else the prices would have entered a Bearish phase.

The Bullish phase is expected to be present for the coming sessions, until some reversal pattern is encountered. Therefore, as of now, it is better to buy Infosys, and wait for further signals.